Friday, June 26, 2009

Markup and Margin

Markup:
is the difference between the price of a product and the cost of that product.E.g if cost of goods is Rs $100 and you add $50 to this to arrive at the retail price of $150 then the mark up is Rs 50

Markup=Selling Price-Cost

Markup Percentage:
A markup is what percentage of the cost price do you add on to get the retail price. E.g if cost of goods is $100 and you add $50 to this to arrive at the retail price of $150 then the mark up is $50 and the mark up percentage $50%.

Markup Percentage=100 ÷ Cost* Profit Amt

Margin:
The difference between the cost of an item and its price E.g if cost of goods is Rs $100 and the retail price of $150 then the rupee margin is $50

Margin=Price-Cost

Margin percentage:
The gross profit or margin expressed as a percentage of the retail price. E.g if cost of goods is Rs 100/- and the retail price of Rs 150/- then the rupee margin is Rs 50/- and the margin percentage is 33.34%.

Margin percentage(30%) = Price ÷ 100*30


What is the difference between Markup and Margin?

Markup is calculated from the cost where as the marigin is calculated from Selling price.

eg. Consider selling price of a item is $100 and cost is $50

If i say 50% margin then my profit is $50

If i say 50% markup then my selling price for this item will be $75 so my profit will be $25.

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